Mayor Annise Parker will push City Council to reconsider tweaking the city's revenue cap to allow more public safety spending.

Mayor Annise Parker will push City Council to reconsider tweaking...

Mayor Annise Parker plans to press City Council this month to reconsider loosening a decade-old revenue cap for public safety spending as talk of a looming budget deficit and possible service cuts grows more ominous around the dais.

The cap limits the growth in city revenues to the combined rates of inflation and population growth. Last year, the city hit the cap for the first time, forcing a property tax rate trim and preventing $53 million from flowing to city coffers. Next fiscal year, the triple threat of soaring pensions costs, revenue cap limitations and debt payments will leave the city facing a $126 million deficit.

Repealing or tweaking the revenue cap, however, is a difficult pitch to make to voters, who approved the limit in 2004. Parker would likely face a strong conservative campaign casting the city's financial troubles as a spending problem rather than a revenue issue. Even city officials acknowledge that the revenue cap is no cure-all and would have to be coupled with reining in some expenses.

But first, Parker still has to convince a wary City Council that the revenue cap should land on the November ballot. A charter review committee in February took a unanimous, nonbinding vote not to send any cap modifications to voters, with most council members saying the city still needed to prove it was spending taxpayer money wisely.

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The other significant change to the city charter that Parker plans to present, shifting from three two-year terms to two four-year terms starting in 2019, has drawn broader support.

"I'm going to make them vote up or down," Parker said of the revenue cap. "If they want to give a pay raise to firefighters without having to cut huge numbers of programs across the city they're going to have to figure out that, you know, that's one way to bring some relief in."

Parker's pledge followed a contentious eight-hour meeting Wednesday where City Council pushed to reinstate road and park projects that had been knocked off an $8.7 billion capital spending plan, in part because of the cap.

She would need to secure council approval in the next few weeks to qualify for the November ballot. The specifics of the revenue cap proposal, however, are still being hashed out.

For some on council, the increased focus on the city's financial predicament since the February committee meeting is enough to merit another look.

Councilwoman Ellen Cohen, for instance, said "the landscape has really changed" since she cast a vote against placing the cap on the ballot.

A Moody's credit report issued two weeks ago revised the city's debt outlook to negative for the first time in at least five years. The revision is a warning, analysts said, citing both the revenue cap and the city's pensions costs as detrimental.

City Controller Ron Green urged council to do something about the cap at a budget committee meeting last week.

"Now is the time to revisit it," Green said. "Moody's has made it clear that not having any flexibility to bring in more revenue, whether your expenditures are going up or not, is going to be an issue."

On the pension side, more than 95 percent of the $130 million general fund spending increase in Parker's budget this year is swallowed by contractual payments, namely pension obligations.

Changes in the early 2000s to pension benefits for police, firefighter and municipal retirees led to a huge spike in costs. Unlike police and municipal employees, Houston's contribution to firefighters' pensions is set by the Legislature and payouts for new hires are more generous than those for new police or municipal employees.

But lobbying efforts in Austin to allow the city control over those costs have repeatedly failed.

"Look, we've got to do something," Cohen said. "Politicians particularly get 'dinged' for changing their mind. But with this, it means that now I've been given more information and I think we at least need to have a conversation."

Rice University political scientist Mark Jones said voters don't react warmly to property tax hikes, so Parker would need to lead a compelling campaign that demonstrates public safety is suffering.

Jones pointed to the Houston Police Department work-demands analysis released last year showing the understaffed agency ignored 20,000 cases with workable leads.

Voters already tweaked the cap in 2006, allowing the city to raise an additional $90 million above the cap for public safety spending. But the city has exhausted that room.

Council, too, will need the right sell, Jones said.

"The framing to council is that there are relatively few City Council members who want to take ownership of major cuts in city services," Jones said. "They would at least lean toward letting voters make the decisions."

But for some council members, the framing won't matter.

Councilman Dave Martin, along with conservative colleagues C.O. Bradford and mayoral hopeful Steve Costello, said last week that the city's financial problem is a spending one.

They've also argued that voters are unlikely to support a property tax hike if they have yet to experience any significant service cuts.

"We have a patient," Martin said. "Our patient has a serious illness, and lifting a revenue cap would be like taking them to dentist's office for a filling while they have a brain hemorrhage. And we are hemorrhaging money."